There are a few other methods we could try for that driver install. The first one being similar to what you've already tried. Uninstall the driver that's currently in use (if prompted, check the box for 'delete driver files'). Then, instead of using the .exe driver, try downloading the .zip one, and running it using the have disk method here; http://www.intel.com/support/graphics/sb/cs-029635.htm
If that doesn't work, try running the Intel Driver Update Utility located on; Intel Download Center
Let me know how it goes,
I got another issue with this. When I need to restart my PC for old driver to finish uninstalling, it automatically reinstalls the same old driver. Please help, what service does this to disable or enable?
Hold off the reboot after the uninstall until you've installed the new driver, then do the reboot.